Possible $10bn US fine on BNP unreasonable: France

Paris, June 3, 2014

France said it would defend the interests of its biggest bank BNP Paribas, calling a possible $10 billion-plus US fine "unreasonable" and warning it could have a bearing on transatlantic free trade talks.

French government ministers have until now shied away from discussing in public BNP' negotiations with US authorities, who are investigating whether the lender evaded US sanctions relating primarily to Sudan, Iran and Syria between 2002 and 2009.

"If there is a an error or a violation then it's normal that there is a fine, but the fine has to be proportionate and reasonable," Foreign Minister Laurent Fabius said on France 2 television on Tuesday. "These figures are not reasonable."

The criticism comes two days before US President Barack Obama meets President Francois Hollande in Paris, with ties between the two allies already strained over the United States' handling of the Syrian crisis and France's reluctance to cancel a deal to sell helicopter carriers to Russia.

French officials have said Hollande will bring up the BNP issue during the talks, which Fabius will also attend. Other possible subjects for discussion could be US conglomerate General Electric Co's bid for French group Alstom SA's energy assets, a move which prompted Hollande's government to encourage a rival approach from Germany's Siemens AG.

US authorities, including New York state's top banking regulator, the Justice Department and the Manhattan District Attorney allege BNP stripped out identifying information from wire transfers so they could pass through the US financial system without raising red flags, sources told Reuters.

Sources familiar with the negotiations said a settlement could include a fine of more than $10 billion - almost as much as BNP's pretax income of 8.2 billion euros ($11.2 billion) in 2013 - and other penalties, such as a possible temporary suspension of the bank's authority to clear US dollar transactions.

Although the penalty is not set, one source said, negotiations with BNP were "north of $8 billion," considerably higher than the $1.1 billion which it had previously set aside.

BNP declined comment on the matter on Tuesday. Last month it said it had improved control processes and was doing all it could to ensure such mistakes don't occur again.

BNP has lost more than 6 billion euros of its stock market value since the end of April, reflecting concerns that a heavy fine could force it to restrain its dividends, reduce lending and even raise fresh capital to bolster its finances.

"These figures could have a negative impact and BNP could see its capital hit and that means less loans, especially for French firms," Fabius said. - Reuters